Raising Social Security’s Retirement Age Would Cut Benefits for All New Retirees
Harm Would Fall Disproportionately on Seniors With Low Incomes
Some policymakers, such as those on the Republican Study Committee, have proposed to raise Social Security’s full retirement age to 70 and beyond. Raising the retirement age cuts benefits for all new retirees — that is, those claiming Social Security benefits for the first time. These cuts could be deep, and they would fall hardest on lower- and middle-income beneficiaries because they rely most heavily on Social Security benefits. Moreover, they have not seen the life expectancy gains that higher-income people have experienced and that are often used as the rationale for raising the retirement age.
The full retirement age is the age at which new retirees can receive full Social Security benefits. If beneficiaries claim before full retirement age, they receive permanently reduced monthly benefits; if they claim after, they get a permanent increase. The full retirement age was 65 for most of Social Security’s history. The last major Social Security overhaul, in 1983, gradually raised the age to 67, effectively cutting benefits by 13 percent. Now there is renewed talk of moving the age to 70, which would effectively cut currently scheduled benefits by nearly 20 percent.
Advocates for raising the retirement age often use two arguments that don’t stand up to scrutiny. The first is that people in the United States are living longer. While average life expectancy at 65 has increased since 1983, longevity for the bottom half of earners has hardly risen at all — and this was true even before the COVID-19 pandemic. The life expectancy gap by income is large and growing, and Black workers in particular still experience lower lifetime earnings and face an average shorter life expectancy than white workers — due in no small part to a long history of structural racism and discrimination in education, housing, health care, and employment as well as systemic bias in the criminal legal system. Additionally, even average life expectancy gains dramatically reversed over the past several years, driven by the pandemic but also reflecting other troubling trends, like rising opioid deaths.
Proponents also argue that big changes to Social Security are necessary to avoid automatic, across-the-board cuts if Social Security’s trust funds become depleted. The irony of that argument is that over time, raising the retirement age would yield the same result that they purport to want to avoid — a large, across-the-board benefit cut. Raising the retirement age to 70 would ultimately cut average lifetime benefits for new retirees by nearly 20 percent, whereas if Social Security’s reserves are depleted, congressional inaction would force a 23 percent cut for all beneficiaries.
Social Security benefits are already modest, and beneficiaries rely on them for most of their income. The facts argue for avoiding cuts in future benefits, which includes not raising the full retirement age — a position that the majority of people across party lines support strongly. It would be better and more equitable to finance critical Social Security benefits by raising revenues, particularly from higher-income people whose life spans — and incomes — have risen much faster than average.
Raising the Full Retirement Age Cuts Benefits Across the Board
The full retirement age is the age at which full Social Security benefits are paid. Workers can file sooner and collect permanently reduced monthly benefits, or later and get larger monthly benefits. These reductions and credits are designed to be roughly “actuarially neutral,” meaning that a person with average life expectancy will get around the same lifetime benefits — either a smaller monthly benefit for a longer time, or a bigger monthly benefit for a shorter time. Under current law, retirees get 70 percent of their full benefit if they claim at 62, 100 percent if they claim at 67, and 124 percent if they claim at 70 (with a sliding scale for every month between those ages). Raising the retirement age means the early retiree gets a deeper reduction and the delayed retiree gets a smaller increase, but average lifetime benefits are lower by about the same percentage at each claiming age.
As noted, the full retirement age was 65 for most of Social Security’s history. The 1983 overhaul of Social Security gradually raised the age to 67, which it reached in 2022 for those born in 1960 or later — effectively cutting benefits by 13 percent as compared to benefits if the retirement age had remained at 65. Each one-year increase in the full retirement age is equivalent to a roughly 7 percent cut in monthly benefits for all affected retirees. So, if the full retirement age were raised to 70, current law Social Security benefits at any given claiming age would be reduced by nearly 20 percent.
Retirees can begin to claim at 62, the earliest eligibility age. When the full retirement age was 65, a worker claiming at 62 would get 80 percent of a full benefit. For a worker whose full benefit is $2,000, this would be $1,600 per month. (See Figure 1.) Now that the full retirement age is 67, a worker who files at 62 gets 70 percent of a full benefit, or $1,400 per month, in this example. If the full retirement age were 70, a worker filing at age 62 would get 57 percent of a full benefit, or $1,140 per month. That reduction in monthly benefits lasts for the rest of their life.
Raising the retirement age amounts to an across-the-board cut in benefits, regardless of whether a worker files for Social Security retirement benefits before, upon, or after reaching the full retirement age. When the full retirement age is increased, retirees have no way to avoid the cut. If they claim when they otherwise would have, they get a lower monthly benefit than they would have under current law. If they delay their claims, they can receive the same monthly benefit that they would have under current law — but because they will receive it for a smaller number of years, their lifetime benefits will still be lower.
Cuts Would Fall Hardest on People Who Rely on Benefits Most
Though raising the full retirement age reduces lifetime benefits approximately equally for all new retirees, on average, the effects of those cuts would fall hardest on those who rely on benefits most. For a typical beneficiary, who receives about half of their retirement income from Social Security and also has income from other sources — such as pensions, earnings, or savings — a 20 percent cut would result in a 10 percent reduction in total income. But for a beneficiary who relies solely on Social Security, a 20 percent benefit cut means a 20 percent reduction in total income. It is also worth noting that due to discrimination in the labor market and a variety of other structural inequities, Black and Latino workers are less likely than white workers to have access to private retirement plan coverage, and they have lower median values in the retirement accounts that they do own.
Most Retirees Claim Early, and Many Cannot Work Longer
Proponents of raising the full retirement age often argue that people should work longer. However, that is simply not possible for many older workers, due to health problems, job loss, and caregiving responsibilities. Those who must claim early will face steep reductions relative to their full benefit amounts if the retirement age is increased.
Most retirees claim before the full retirement age and get a reduced benefit. In 2021, nearly 3 in 10 workers claimed when they were 62, the earliest eligibility age. (See Figure 2.) Some 57 percent of workers claimed before 66, in a year that the full retirement age was 66 and 10 months. About 1 in 4 workers claimed sometime during their 66th year, and the rest — fewer than 1 in 5 workers — claimed after their full retirement age and received a delayed retirement credit.
Many people who claim at 62 — or before the full retirement age more generally — cannot work any longer, for a variety of reasons. Among people who claim as soon as they are eligible, 28 percent of women and 20 percent of men had already stopped working before age 62. This may be due to health conditions: about 40 percent of people in their early sixties report a potentially disabling condition, but less than half of them ever receive disability benefits. Or it could be because of job loss: 4 out of 10 recent retirees report being forced out of their jobs, and many struggle to find other work. Many early retirees also have significant caregiving responsibilities — often for ailing parents or spouses, or for grandchildren.
Expected Longevity Varies Based on Income, Gender, Race and Ethnicity
Policymakers who support increasing the full retirement age often point to increasing life expectancy as a rationale. It is true that average life expectancy at age 65 has grown, rising nearly three years in the four decades since Congress last addressed Social Security’s finances, then falling by over a year in 2020 — a decline from which it still hasn’t rebounded completely. However, this average masks significant differences by income, sex, race, and ethnicity, as well as differing trends for each of these groups over time. For example, Black and American Indian or Alaska Native retirees have significantly shorter average life expectancies than white retirees, while Hispanic and Asian retirees have longer average life expectancies. In 2019, white population life expectancy at age 65 was 19.5 years, while life expectancy for both the Black and American Indian or Alaska Native populations at age 65 was 18.2. Asian and Hispanic life expectancies at age 65 were 23.4 and 21.6, respectively. Differences in longevity by race and ethnicity are much larger at younger ages.
People with higher incomes live longer — and the gap is growing. The higher a person’s socioeconomic status — whether measured in earnings, income, or education — the longer their life expectancy. For example, higher-earning men can expect to outlive lower-earning men by more than five years. (See Figure 3.) Moreover, an abundance of research shows the gap between the life spans of those with high incomes and those with low incomes has grown significantly, and this trend is accelerating. While many people will live significantly longer than their parents and grandparents, some groups have seen no gains, and others have lost years of life. This disturbing phenomenon is concentrated among women: the poorest 40 percent of women have lower life expectancies than the previous generation, one study found.
Policymakers Should Look to More Equitable Financing Solutions
If life expectancy at age 65 had increased in such a way that most people could expect significantly more years of Social Security benefit receipt, examining the full retirement age might be more reasonable. But that is not what has happened — life expectancy gains have almost exclusively gone to higher earners, making an increase in the full retirement age particularly problematic.
Social Security benefits are already modest, and many beneficiaries rely on them for most of their income. The facts argue for avoiding cuts in future benefits overall — a position that the majority of people across party lines support strongly, as noted above. In fact, 8 in 10 people in the U.S. oppose raising the retirement age, including overwhelming majorities of both Democrats and Republicans.Moreover, there is a need to shore up benefits to address the hardships faced by the large number of older people with incomes below or only modestly above the poverty line.
There are better, more equitable ways to finance critical Social Security benefits. Policymakers should address Social Security’s long-term shortfall primarily by increasing tax revenues. Social Security will necessarily require an increasing share of our nation’s resources as the population ages, and polls show a widespread willingness to pay more to strengthen the program. Recent trends justify boosting Social Security’s payroll tax revenue: Social Security’s tax base has eroded since the last time policymakers addressed solvency in 1983, largely due to increased earnings inequality and the rising cost of non-taxed fringe benefits, such as health insurance. Had Social Security’s tax cap — now $160,200 — continued to cover 90 percent of aggregate earnings as it did in 1983, it would be $300,000 today. Policymakers could also consider new sources of revenue, particularly from the wealthiest people in the country, for whom earnings are only a small portion of their income.
 Republican Study Committee, “Blueprint to Save America: Fiscal Year 2023 Budget,” https://banks.house.gov/uploadedfiles/rsc_2023_budget_final_version.pdf.
Glenn R. Springstead, “Distributional Effects of Accelerating and Extending the Increase in the Full Retirement Age,” Social Security Administration (SSA), January 2011, https://www.ssa.gov/policy/docs/policybriefs/pb2011-01.html.
 Kilolo Kijakazi, Karen Smith, and Charmaine Runes, “African American Economic Security and the Role of Social Security,” Urban Institute, July 2019, https://www.urban.org/sites/default/files/publication/100697/african_american_economic_security_and_the_role_of_social_security.pdf; Kathleen Romig, “Social Security Lifts More People Above the Poverty Line Than Any Other Program,” CBPP, April 19, 2022, https://www.cbpp.org/research/social-security/social-security-lifts-more-people-above-the-poverty-line-than-any-other.
Ibid; SSA, “The 2023 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds,” March 2023, https://www.ssa.gov/oact/TR/2023/index.html.
 Kim Parker, Rich Morin, and Juliana Menasce Horowitz, “Looking to the Future, Public Sees an America in Decline on Many Fronts,” Pew Research Center, March 21, 2019, https://www.pewresearch.org/social-trends/2019/03/21/public-sees-an-america-in-decline-on-many-fronts/.
Springstead, op. cit.
 Kijakazi, op. cit.; Kathy Ruffing, “For Most Americans, Retirement Accounts Are Paltry,” CBPP, October 9, 2020, https://www.cbpp.org/blog/for-most-americans-retirement-accounts-are-paltry.
 SSA, “Annual Statistical Supplement, 2022,” Table 6.A5, December 2022, https://www.ssa.gov/policy/docs/statcomps/supplement/2022/6a.html#table6.a5.
 Hilary Waldron, “Trends in Working and Claiming Behavior at Social Security's Early Eligibility Age by Sex,” SSA, August 2020, https://www.ssa.gov/policy/docs/workingpapers/wp114.html.
 Peter Gosselin, “If You’re Over 50, Chances Are the Decision to Leave a Job Won’t be Yours,” ProPublica, December 28, 2018, https://www.propublica.org/article/older-workers-united-states-pushed-out-of-work-forced-retirement.
 K. Mark Bye et al., “Unisex Life Expectancy At Birth And Age 65,” SSA, Office of the Chief Actuary, Actuarial Note 2023.2, March 2023, https://www.ssa.gov/OACT/NOTES/ran2/an2023-2.pdf; 2023 Trustees’ Report, Table V.A4. Life expectancy at 65 gives policymakers an indication of how many years a typical person will receive Social Security benefits, whereas life expectancy at birth — which has changed more dramatically over time — includes changes in infant mortality and other factors that do not affect Social Security’s costs.
 Centers for Disease Control and Prevention, “Life expectancy at birth, age 65, and age 75, by sex, race, and Hispanic origin: United States, selected years, 1900–2019,” 2021, https://www.cdc.gov/nchs/hus/data-finder.htm?year=2020-2021&table=Table%20LExpMort. Note: This paper does not analyze changes in life expectancy by race and ethnicity, because the effects of raising the full retirement age are not contingent on those changes.
 Hilary Waldron, “Mortality Differentials by Lifetime Earnings Decile: Implications for Evaluations of Proposed Social Security Law Changes,” SSA, February 2013, https://www.ssa.gov/policy/docs/ssb/v73n1/v73n1p1.html; Barry P. Bosworth and Kathleen Burke, “Differential Mortality and Retirement Benefits in The Health And Retirement Study,” Brookings Institute, April 8, 2014, https://crr.bc.edu/wp-content/uploads/2014/04/wp_2014-4.pdf; Hilary Waldron, “Trends in Mortality Differentials and Life Expectancy for Male Social Security-Covered Workers, by Socioeconomic Status,” SSA, April 2008, https://www.ssa.gov/policy/docs/ssb/v67n3/v67n3p1.html; National Academies of Sciences, Engineering, and Medicine, “The Growing Gap in Life Expectancy by Income: Implications for Federal Programs and Policy Responses,” National Academies Press, 2015, https://nap.nationalacademies.org/catalog/19015/the-growing-gap-in-life-expectancy-by-income-implications-for.
 Bosworth and Burke, op. cit.; Nan Marie Astone, Steven Martin, and Laudan Aron, “Death Rates for US Women Ages 15 to 54: Some Unexpected Trends,” Urban Institute, March 2015, https://www.urban.org/sites/default/files/publication/43731/2000131-Death-Rates-for-US-Women-Ages-15-to-54.pdf.
 Paul N. Van de Water and Kathleen Romig, “Social Security Benefits Are Modest,” CBPP, January 8, 2020, https://www.cbpp.org/research/social-security/social-security-benefits-are-modest.
 Kim Parker, op. cit.
 Quinnipiac University, “Food Costs Top List Of Americans' Financial Concerns, Quinnipiac University National Poll Finds; 68% Concerned They Won't Have Enough Money To Live Comfortably In Retirement,” March 30, 2023, https://poll.qu.edu/poll-release?releaseid=3871.
 Kim Parker, op. cit.; Elisa A. Walker, Virginia P. Reno, and Thomas N. Bethell, “Americans Make Hard Choices on Social Security: A Survey with Trade-Off Analysis,” National Academy of Social Insurance, October 2014, https://www.nasi.org/research/disability/report-americans-make-hard-choices-on-social-security-a-survey-with-trade-off-analysis/.
 Kathleen Romig, “Increasing Payroll Taxes Would Strengthen Social Security,” CBPP, September 27, 2016, https://www.cbpp.org/research/social-security/increasing-payroll-taxes-would-strengthen-social-security.